Blues And Holland Hospital Chicken And The Egg

June 7, 2002
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HOLLAND — Blue Cross Blue Shield of Michigan is working on a new front as its tries to land a participating agreement with Holland Community Hospital for its No. 1 insurance product, the preferred-provider organization Community Blue.

The health insurer this spring began reaching out directly to physician practices in Holland to negotiate individual participating agreements. The effort began after an unsuccessful bid to secure a participating agreement with Principal Health, the physician-hospital organization of Holland Community Hospital, and the Blues was given the go-ahead to talk directly to physicians.

If Blue Cross Blue Shield is able to bring enough physicians into the Community Blue network, it could help to generate an agreement with Holland Community, the only hospital in Michigan that does not participate in the Blues’ PPO and a minority owner of a competing product, Priority Health.

“I think we’re going to have some successes. We’re going to bring some of those Holland-based primary-care physicians in,” said Jeff Rubleski, sales team manager for the Blues in West Michigan.

The lack of a participating agreement to date has left Community Blue with a minimal market share in Holland and just a handful of participating primary-care physicians locally, even though it’s the Blues’ most popular health plan with a little more than 2 million subscribers statewide.

Hefty annual increases in health premiums are raising the stakes for Community Blue, which on average tends to cost about 10 percent to 20 percent less than the Blues’ HMO product, Blue Care Network, Rubleski said.

“We need better access,” Rubleski said. “Employers are growing increasingly impatient with this, saying ‘Blue Cross, we want to see results.’”

Blue Cross and Blue Shield of Michigan and Holland Community Hospital — which has participating agreements with all of the other Blues health plans — have been at odds over Community Blue for years. Initially, the hospital didn’t like the deep discounts required and reimbursement rates provided under Community Blue.

Continued negotiations led to the Blues putting on the table for Holland Community what Rubleski calls one of the best financial packages offered to any hospital in the state.

But Terry Steele, Holland Community’s corporate vice president and chief financial officer, says the issue keeping the two apart isn’t financial, it’s network size.

With Community Blue lacking a sizable physician network in Holland, and a resulting patient base to steer Holland Community’s way, it makes no sense for the hospital to accept the PPO and the discounts it requires.

Community Blue’s lack of participating physicians has been “one of the primary issues going back some time,” Steele said. The hospital wants to reach a participating agreement for Community Blue but needs to have a physician network in place first, he said.

“From a care standpoint, we certainly would want for us to be as available as possible,” Steele said. “(But) it’s not in our best interests to have any payer out in the community offering a product that does not have a viable physician network.

“It really makes sense for Blue Cross to approach each individual physician office. We’ll see where that goes,” Steele said.

And that’s the obstacle separating the two sides.

Blue Cross Blue Shield of Michigan still wants to secure a participating agreement first with the hospital, Rubleski said. He contends that if the hospital were to sign a participating agreement, local physicians would soon follow suit.

Rubleski remains hopeful that the Blues can still come to an agreement with the hospital for Community Blue, even as it seeks to sign up physicians.

“If we could bring in Holland Hospital, that will have a huge impact on bringing the doctors in,” Rubleski said. “It will be a very clear sign from the hospital.”           

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